Editorial: How to fix Obamacare

If Democrats will tolerate this new Republican proposal ...

February 12, 2014

The rules changed Monday for American businesses trying to decipher what they're supposed to do under Obamacare. That is, the rules changed again.

This time, the White House delayed for another year the mandate forcing smaller employers to provide coverage to full-time workers. Employers with 50 to 99 full-timers now don't have to offer coverage or pay a penalty until 2016. That's the second delay in this mandate. Larger employers also caught a break: They now must offer coverage to fewer employees initially than dictated under the law.

The administration's slow-motion surrender on Obamacare mandates is not hard to fathom. The White House is worried that employers will cut jobs or scale back hours as Obamacare's costs explode. Delaying the mandate is smart because it gives employers greater flexibility to run their businesses.

But it also contributes to the uncertainty that has dogged Obamacare's rollout. What happens in 2015? More delays and rules changes for employers? More diversions from what the law demands? The White House and its Democratic allies may not know the answers to those questions. But we hope they'll see this moment, despite its embarrassment to them, as a major opportunity.

President Obama has said he is open to improving the law, not repealing it. The first improvement is obvious:

The Obamacare employer mandate is collapsing. Propping it up with delays leaves employers guessing and thus discourages hiring. The White House and Congress should end the business mandate now. Let businesses decide how and if to extend coverage to their employees, just as they do other benefits.

That move would tee up a second and equally necessary change: Scrap the individual mandate that Americans have health insurance or pay a penalty.

The individual mandate is a key trade-off in the law: People must buy insurance and, in exchange, they cannot be denied coverage because of pre-existing conditions. Such guaranteed coverage is popular with a wide swath of Americans. But the law also invites people to delay buying insurance because they know they can always get it, should they unexpectedly be injured or become seriously ill.

There's a better way to guarantee coverage. Last month, Republican Sens. Richard Burr of North Carolina, Tom Coburn of Oklahoma and Orrin Hatch of Utah offered a plan to preserve that key benefit but also emphasize individual responsibility over government fiat.

Under this plan, consumers with pre-existing conditions couldn't be denied coverage. They also wouldn't be charged extra for coverage — provided they had been enrolled continuously in some sort of health plan. In other words, workers who lose their jobs wouldn't also lose the ability to buy insurance, even if they had pre-existing conditions that require costly care. They'd be able to buy coverage, and there would be federal subsidies for lower-income people. However, if they had chosen to go without insurance, they wouldn't be guaranteed low-cost coverage at a moment's notice if they later were injured or became ill.

Such a provision protects individuals who take the responsibility of buying insurance against denial of coverage, or having a plan canceled later because of a pre-existing condition. But it also shields insurers from some of the massive expense of covering people who only sign up when they're sick.

The senators' plan also addresses another glaring shortcoming of Obamacare: the government requirement that insurers provide extensive and expensive coverage, even if people don't want it and can't afford it. This plan would create a robust marketplace by allowing insurers to offer a wider variety of plans: Consumers would have more coverage and price options than under Obamacare. Customers — not the government — would choose the best plans for their needs and pocketbooks.

We'll soon see new figures on how many people have signed up (and actually paid) for coverage under Obamacare. Insurers need healthy customers to sign up in droves, to offset the costs of serving sicker people. If the healthy don't sign up, insurance premiums rocket and the entire system sinks into insolvency. Preliminary numbers don't look encouraging.

The bottom line: Republicans in Congress don't have the votes to repeal and replace Obamacare. But they now have strong ideas to improve the law, building on the lessons already learned from Obamacare's failures.

Doctors often prescribe harsh medicine to prevent a disease from spreading. Taking these bold steps now would improve the chance of healing Obamacare.